BIR Ruling [DA-284-00]

July 18, 2000 BIR RULING [DA-284-00] Honorable Celso D. Gagan Chairman, Commission on Audit Commonwealth Avenue Quezon City S i r : This refers to your letter dated March 10, 2000 requesting for a ruling regarding the proper basis for computing the value-added tax. In reply, please be informed that the 10% VAT imposed under Section 108 of the Tax Code of 1997 is computed based on the gross receipts derived from the sale or exchange of services. Gross Receipts means "the total amount of money or its equivalent representing the contract price , compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits and advanced payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person, excluding value-added tax." Shown below is a computation on how to arrive at the gross taxable receipts during a certain period for purposes of computing the 10% VAT: Income or billings during the period Pxxx Add: Accounts Receivable, beginning Pxxx Retention Receivable, beginning xxx xxx Total Amount for Collection Pxxx Less: Accounts Receivable, ending Pxxx Retention Receivable, ending xxx xxx Collection of income and receivables Pxxx Add: Deposits, advances and/or Mobilization fees xxx Gross Receipts during the period Pxxx Less: Gross receipts from exempt service Pxxx Gross receipts from zero-rated service xxx xxx Taxable gross receipts Pxxx ==== Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group